Institutions and Development Whether it is a debate on the social contract of the state emerging from a description of the state of nature by Hobbes, Locke and Rousseau; or a debate on what constituted the community and its nature, between Tonnies, Dewey and Durkheim on the one hand and Marx, Engels, Spencer, Comte and Weber on the other; or a debate on the state versus the market, the quest for appropriate institutions to help alleviate poverty in developing countries is not new. At a time when the role of the state is rapidly undergoing change and can affect the livelihood and security of the poor, the concern is to build democratic, accountable and responsive state institutions.
The French philosopher Jean-Jacques Rousseau made a distinction between the nature of man and the institutions that a society harbors. Rousseau, like Thomas Paine after him, took a novel position that men were good, but the social institutions were bad, leading to bad social outcomes. Others like Thomas Hobbes and James Madison were sceptical of human nature, and thus established institutions to prevent people from undermining governance. March and Olsen take a more autonomous role for institutions. “Political democracy depends not only on economic and social conditions but also on the design of political institutions.” For them macro institutions such as the bureaucracy, the legislature, and the judicial system are not only arenas for contending social forces, but they are also “collections of standard operating procedures and structures that define and defend interests. They are political actors in their own right” (March & Olsen, 1984, p. 167). This is not to say that relations of power are not important, rather that political outcomes are not just a function of the distribution of resources or power, but also of the distribution of preferences or interests among political actors, as well as the constraints imposed by the rules of the game or institutions. To put the argument simply, the organization of political life makes a difference.
One may ask the question whether or not different macro institutional arrangements lead to different outcomes. The literature on governance attempts to answer this question with respect to macro institutions, for instance, a constitution – codified or not; democracy – consensual or Westminster style; or human rights – implemented or not; unitary or federal state; and the like. There is little literature on micro structures and processes coming from an institutional perspective that give us a sense of dissimilar outcomes from a comparative assessment of different micro institutions in a similar setting. An epistemology emphasizing micro-politics and institutions is important because local democratic processes and institutions are beginning to play a significant role in determining social and economic privileges and opportunities. Within the constraints of conducting such a study, this paper will attempt this exercise. However, it first needs to be clarified as to what we consider the key reasons emerging in the policy literature that argues in favour of decentralization for this has a bearing on what we consider to be good outcomes.